DigitalOcean (NYSE:DOCN) Shares Gap Down - Here's What Happened

Key Points

• DigitalOcean shares opened sharply lower, falling from a prior close of $127.17 to $119.80 before recovering to about $132.11, with roughly 1.63 million shares traded.
• Analyst sentiment remains positive but target prices have been mixed: the stock has a “Moderate Buy” consensus rating and an average price target of $151.93, while Barclays and UBS recently lowered their targets.
• DigitalOcean exceeded quarterly expectations, reporting $0.44 in EPS versus the $0.27 consensus and $257.9 million in revenue, up 22.4% year over year. Insiders sold approximately $6.2 million of shares over the past three months.

DigitalOcean Holdings, Inc. (NYSE:DOCN - Get Free Report) gapped down before the market opened on Tuesday . The stock had previously closed at $127.17, but opened at $119.80. DigitalOcean shares last traded at $132.1080, with a volume of 1,634,190 shares changing hands.

Wall Street Analyst Weigh In

DOCN has been the subject of several analyst reports. Barclays reduced their target price on DigitalOcean from $184.00 to $160.00 and set an "overweight" rating for the company in a report on Tuesday, July 21st. Oppenheimer set a $190.00 target price on DigitalOcean in a research note on Wednesday, May 6th. Citigroup raised their target price on DigitalOcean from $180.00 to $185.00 and gave the company a "buy" rating in a report on Wednesday, July 8th. KeyCorp began coverage on DigitalOcean in a research report on Tuesday, June 2nd. They issued an "overweight" rating and a $200.00 price target on the stock. Finally, UBS Group lowered their price objective on shares of DigitalOcean from $175.00 to $155.00 and set a "neutral" rating on the stock in a research note on Wednesday, July 8th. Two analysts have rated the stock with a Strong Buy rating, eleven have given a Buy rating and three have given a Hold rating to the stock. According to data from MarketBeat, the company currently has an average rating of "Moderate Buy" and an average price target of $151.93.

DigitalOcean Price Performance

The stock has a 50-day simple moving average of $146.62 and a 200 day simple moving average of $106.94. The company has a debt-to-equity ratio of 0.92, a quick ratio of 1.46 and a current ratio of 1.46. The company has a market cap of $13.29 billion, a P/E ratio of 55.33 and a beta of 1.61.

DigitalOcean (NYSE:DOCN - Get Free Report) last released its quarterly earnings data on Tuesday, May 5th. The company reported $0.44 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.27 by $0.17. The business had revenue of $257.90 million for the quarter, compared to analysts' expectations of $249.76 million. DigitalOcean had a return on equity of 88.86% and a net margin of 24.97%.DigitalOcean's quarterly revenue was up 22.4% on a year-over-year basis. During the same period in the previous year, the business posted $0.56 earnings per share. On average, equities analysts expect that DigitalOcean Holdings, Inc. will post 0.57 EPS for the current year.

Insider Transactions at DigitalOcean

In related news, Director Hilary Schneider sold 4,338 shares of the firm's stock in a transaction that occurred on Friday, May 15th. The stock was sold at an average price of $156.38, for a total transaction of $678,376.44. Following the completion of the transaction, the director owned 24,323 shares in the company, valued at $3,803,630.74. This trade represents a 15.14% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through the SEC website. Also, CFO Matt Steinfort sold 10,000 shares of the company's stock in a transaction on Tuesday, June 2nd. The shares were sold at an average price of $170.07, for a total value of $1,700,700.00. Following the completion of the sale, the chief financial officer owned 538,414 shares in the company, valued at $91,568,068.98. This trade represents a 1.82% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last three months, insiders sold 39,338 shares of company stock worth $6,191,576. 0.96% of the stock is currently owned by insiders.

Institutional Investors Weigh In On DigitalOcean

Several large investors have recently made changes to their positions in the company. Allworth Financial LP boosted its position in DigitalOcean by 54.4% in the third quarter. Allworth Financial LP now owns 724 shares of the company's stock valued at $25,000 after buying an additional 255 shares in the last quarter. Parallel Advisors LLC boosted its holdings in shares of DigitalOcean by 66.2% in the 1st quarter. Parallel Advisors LLC now owns 324 shares of the company's stock worth $28,000 after acquiring an additional 129 shares in the last quarter. Huntington National Bank grew its position in DigitalOcean by 638.3% during the 4th quarter. Huntington National Bank now owns 598 shares of the company's stock worth $29,000 after acquiring an additional 517 shares during the last quarter. NBC Securities Inc. acquired a new stake in DigitalOcean during the 4th quarter valued at $32,000. Finally, Banque Cantonale Vaudoise bought a new position in DigitalOcean in the 1st quarter valued at $33,000. Institutional investors own 49.77% of the company's stock.

DigitalOcean Company Profile

DigitalOcean Holdings, Inc is a cloud infrastructure provider that focuses on simplicity, performance and developer experience. The company offers a range of cloud services designed to help software developers, startups and small- to medium-sized businesses deploy, manage and scale applications. Its flagship offering, Droplets, provides virtual private servers that can be configured with various CPU, memory and storage options. In addition to compute instances, DigitalOcean's platform includes managed Kubernetes, scalable object and block storage, managed databases, load balancers and networking capabilities such as Virtual Private Cloud (VPC) and Floating IPs.

Founded in 2011 and headquartered in New York City, DigitalOcean was created with the goal of making cloud computing more accessible to individual developers and smaller teams.

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